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Agreement has been reached on the long-awaited Trans-Pacific Partnership (TPP). The TPP is a free trade agreement between 12 Pacific Rim nations, including Australia, Japan, Malaysia, New Zealand, Singapore and the United States, which represent around 40% of global GDP and one third of world trade. The text of the TPP is still being finalised by the TPP States and is not yet available.

Reports indicate that the TPP includes an Investment Chapter with a “modern” investor-state dispute settlement (ISDS) mechanism.

USTR Summary of the Investment Chapter

The scope and extent of the Investment Chapter will only become clear when the text of the TPP is released to the public. A leaked draft of the Investment Chapter was very similar to the 2012 US Model Bilateral Investment Treaty (US Model BIT).

The United States Trade Representative (USTR) has prepared a comprehensive summary of the TPP.

The USTR summary confirms that the TPP provides basic investment protections such as:

  • minimum standard of treatment in accordance with customary international law;
  • national treatment;
  • most favoured nation treatment; and
  • prohibition of expropriation without compensation.

The USTR summary also confirms that the TPP provides for international arbitration of investment disputes. It indicates that there are substantive safeguards to ensure that governments may continue to regulate in the public interest, including on health, safety and the environment. The ISDS mechanism also includes procedural safeguards to, for example, prevent “abusive and frivolous claims”, ensure transparency of arbitral proceedings, impose time limitations on the commencement of claims and rules to prevent parties from pursuing the same claim in parallel proceedings.

It is also reported that the TPP will conclude a binding code of conduct for arbitrators appointed to tribunals in investment arbitrations.

Next Steps

The TPP creates many opportunities for an open market for trade and investment across the 12 TPP States. Reaching agreement on the TPP is the first step in creating that open market.

The TPP Parties continue to finalise the text of the TPP.  Each State will be required to comply with its local procedures to review and ultimately enact the TPP in its State.  The US Congress has put in place a fast track procedure to ratify the TPP.  However, the exact content of the TPP and the process for ratification and entry into force of the TPP will only become clear when the text is released to the public.

Author

Leng Sun Chan is a Principal at Baker McKenzie Singapore and is Baker McKenzie’s Global Head of International Arbitration. He is qualified in Malaysia, Singapore and England. Leng Sun was appointed Senior Counsel in January 2011. Apart from being counsel, Leng Sun is a Chartered Arbitrator and is also on the panel of leading arbitral institutions. He is the Chairperson of the arbitration panel jointly appointed by the EU and Korea under the protocol on cultural cooperation of the Korea-EU FTA. Leng Sun is the Immediate Past President of the Singapore Institute of Arbitrators (SIArb). He is a member of the Committee on the Singapore International Commercial Court. Leng Sun is the Deputy Chairman of the Singapore International Arbitration Centre (SIAC). He is the Deputy Chairman of the SGX (Singapore Exchange) Appeals Committee. Leng Sun was a legal officer of the United Nations Compensation Commission in Geneva and a SIAC-CIAC Observer to the UNCITRAL Working Group on Arbitration. He has published widely in international journals and is the author of the book Singapore Law on Arbitral Awards and Co-Editor of Conflict of Laws in Arbitration. Leng Sun has most recently been recognized among the top lawyers worldwide by "Legal 500 Asia Pacific 2018" as a leading individual in International Arbitration, "Who's Who Legal - Litigation 2017" and, "Who's Who Legal - Arbitration 2016". He is described by Chambers Asia-Pacific 2017 as "one of the best arbitrators and practitioners in arbitration. Leng Sun Chan can be reached at [email protected] and + 65 6434 2703.

Author

Grant Hanessian is a member of the Dispute Resolution team at Baker McKenzie New York. Grant Hanessian serves as global co-chair of the Firm’s International Arbitration Group. He chaired the Litigation Department of the Firm’s New York office from 2003 to 2012. Mr. Hanessian is the US alternate member of the ICC International Court of Arbitration in Paris, vice chairman of the Arbitration Committee of the US Council for International Business (US national committee of the ICC), and a member of the ICC’s Commission on Arbitration and its Task Forces on Arbitration Involving States or State Entities and on Financial Institutions and International Arbitration (leader of Investment Arbitration and Banking & Finance work stream). He is also a member of the American Arbitration Association—International Centre for Dispute Resolution’s International Advisory Committee and its Advisory Committee on Brazil, the International Arbitration Club of New York, the Arbitration Committee of the International Institute for Conflict Prevention and Resolution, the New York City Bar Association's Committee on International Commercial Disputes and Club Español del Arbitraje, and is a founding board member of the New York International Arbitration Center. Grant Hanessian can be reached at [email protected] and +1 212 891 3986.

Author

Jo Delaney was a partner with the Dispute Resolution team at Baker McKenzie in Sydney.

Author

Kabir Duggal is a Senior Associate at Baker & McKenzie in New York. He focuses on international investment arbitration, international commercial arbitration and public international law matters. Mr. Duggal's experience includes disputes under numerous bilateral and multilateral investment treaties in South Asia, Latin America, Central Asia, Middle East, Europe and Africa. He has also worked as a judicial clerk for an Indian Supreme Court Judge. He has also worked on various aspects of public international law. Mr. Duggal was a consultant at The World Bank Group in Washington, DC, where he worked with the Development Research Group focusing on socioeconomic rights in the developing world. He also has worked as a judicial clerk at the Supreme Court of India, and for UNICEF on issues of child rights, child protection, and other policy matters. Mr. Duggal is a Lecturer-in-Law at the Columbia Law School, teaching "International Investment Arbitration," and also gives lectures at the Georgetown University Law School and Fordham Law School. He serves as the head of the advisory team on matters relating to procedure on investmentclaims.com hosted by Oxford University Press and is a Fellow at Columbia Center on Sustainable Development. He also serves on ICSID Review's Peer Review Board and is an Associate Editor for Brill-Nijhoff publisher's international law and arbitration section. Mr. Duggal has been awarded the inaugural “Diversity Fellowship” by the American Bar Association, Section of International Law. Kabir Duggal can be reached at [email protected] and + 1 212 626 4362.